Technical Picture - New Multi-Month Highs

Early strength peaked about 30 minutes into the session. The DOW did not confirm a new recovery high as per the DOW Transports. As depicted on the chart above, we were about 10 pts. shy of the April high. Non-confirmation often precedes a pullback.

The second point of interest is the weekly chart of the S&P. Here we have the 200 SMA acting as resistance. Too early to tell if this is significant.

The SPY daily is just shy of the 62% Fib. extension of the June-Sept. base.

In order to continue higher, we need some participation from steel and financials. Steel is more likely than financials, as the banks looked poised to break down from bearish flag pattern.

Oil has carved out a solid base and continued weakness in the $USD could see oil retest recovery highs.
The chart below is a weekly chart of the $USD. So far the lower trendline is holding, but if it gives way, we have a very important pivot at $74.00 (red arrows), which will likely result in an oversold bounce.

The longer term forecast for the $USD is nebulous given the lack of details and potential impact of QE2 easing.

IBM is setting up an ambush short. Price retraced 62% of the reaction leg lower following earnings. Failure to close above the 62% Fib. level leaves the door open to some selling. Intra-day trendline was breached going into the close today.


SNDK - Failure to break and hold above the base, followed by a retracement back to lower trendline post earnings, looks bearish.

Day Trades - LRCX, ISRG, FFIV, SOHU, TIBX (HCPG)

LRCX - Failed BO on Thursday, turned into a big winner on Friday. I should have been on this one on the open because from the daily, we can see that Friday's close edged out of the base and follow through was expected. I had too many names on my focus list this morning and couldn't get to LRCX in time.

ISRG - Big winner on Friday. Today it tried to follow through but failed, setting up a short. Slippage on the fill, but it worked anyway.

FFIV - Friday in sympathy with RVBD, a cloud name that reported strong earnings. Using Fib retracement to find an entry after the initial thrust on the open. According to Ratio Trader, if price can close above 1.27% extension, it has a good chance to move to 1.62%. FFIV couldn't close that scenario, but I worked it on the pullback to support.

Watch the Fibonacci Ratio Analysis program on stock twits TV.

SOHU was a gapper with big volume. I waited for price to find support after the intial gap and go. Once it became obvious that the 38% Fib. retracement level was going to hold, I went long. Price stalled at the 1.27% extension, but here again, I was able to play the support back to the base.

TIBX was a HCPG setup from yesterday's newsletter. It had edged out of it's daily base on Friday, so I had to trade this one on the open.

RIMM Finally Breaks Out

RIMM finally broke out of a two month base today. As you can see from the volume on 5 minute chart below, there's momentum behind the move. Adding this one back to the focus list for some follow through.

Technical Picture - Minor Gains

The markets opened on a positive note and quickly broke above resistance on the heels of some favorable earnings reports from NFLX, EBAY, CAT, MCD... However, there was a clear loss of momentum as depicted by the negative divergence of the RSI to higher prices on the 15 minute chart below.

As the $USD found support and started to bounce, equities succumbed to some profit taking into midday and early afternoon. GLD was also very weak and acted as a leading indicator.

In the last two hours, the bulls were able to regain control and pushed prices back up to the unchanged line, plus a smidge, to end the day in the green.



AMZN is a good example of how I use Esignal's RSI price bars to help guide my trades. AMZN was basing at intraday support $164.00 and had printed two NRIBs on the 15 minute timeframe. I took a short position on breach of support as depicted below.

RSI 14 did not confirm lower prices on the breach. In fact there was slight positive divergence on the lower low, so I expected the trade to fail and scratched the trade before it cost me.

About an hour later, AMZN setup again at the base. This time it carved out a perfect handle before breaking and the RSI price bars confirmed right away. I covered the short when I noticed positive divergence to a lower low, and shortly after, entered long. The positive divergence to lower price foreshadows a reversal in trend.

Technical Picture - Markets rally on $USD Weakness

Markets rallied on $USD weakness. The greenback fell back down after testing the downsloping 20 EMA. The S&P had solid gains just shy of recent peak, but the $Comp was lagging.

Stocks gapping up on earnings after hours - NFLX and EBAY. Gapping down XLNX.

Initial claims in pre-market and leading indicators and Phil. Fed at 10:00.

Bearish island reversal in GLD unless it can go back and fill the gap.

TAN, the solar ETF is selling off on high volume.

WYNN and CREE daytrades.

I had hoped CREE could rally back up to first level resistance at $51.00. If we look at the chart below, the H&S top reached full extension on the open. Now, we should be able to get a full gap fill over the coming days.

MYGN is flagging.

If crop futures are limit up again tomorrow, AGU should BO of the base.

If $USD continues lower, commodities will continue to bounce. PCX approaching important baseline.

Darvas box long GOOG. Darvas box short EQIX. Important resistance over head for GOOG. This one needs time.

NFLX - earnings gap. Basing at former failed BO level. Should be interesting to watch how this plays out tomorrow.

Trade Review - CELG, AMGN, FSLR

Sunday's post "Biotechs Poised to Breakout" was a good starting point for Monday's day trading.

CELG took out the PDH in pre-market trade, so I used the PM high as my trigger. The stock ran up in morning trade and consolidated sideways in the afternoon. As long as price holds most of these gains, I'll be looking for further upside.

AMGN was somewhat extended after Friday's big move, so I was looking for some retracement. It carved out a bullish morning star reversal pattern just above the 38% Fib. retracement of Friday's range. Wait for a low risk entry. After a slow start, it worked nicely in the last two hours of the session.

FSLR from the focus list, took out resistance in early trade, retested and held as support for a fast move higher.

BIIB, which I didn't trade today, looks like the best biotech setup going into Tuesday.

Technical Picture - Markets Mixed

Markets were mixed on Friday with tech outperforming the broader markets on the heels of GOOG earnings Thursday night. Several factors weighted on the S&P and the DOW including continued weakness in banks/financials over forclosure issues, bounce in the $USD, weak earnings from bellwether GE, and unfavorable Mich. sentiment data.

As we can see from the 5 day performance chart below, money is flowing out of financials into tech.

The banking/financial sectors are really ugly. If they don't find support soon, it'll kill the rally.

Diverging markets Comp. vs. S&P and DOW is a yellow light and could lead to short-term corrective price action.

Companies reporting earnings this week:

Monday: C, HAL, PETS, AAPL, IBM, STLD, VMW, and ZION.
Tuesday: AEP, BAC, KO, EMC, GS, HOG, ITW, JNJ, LMT, OXY, BTU, SVU, WFT, CREE, ISRG, JNPR, SYK, WDC, and YHOO.
Wednesday: ABT, MO, BA, DAL, GENZ, MS, LCC, USB, WFC, AMR, ETFC, EBAY, NFLX, SCHN, and STX.
Thursday: ALXN, T, BBT, CAT, DHR, LLY, FCX, GR, HSY, JBLU, NTRS, NUE, PENN, PM, PCP, LUV, TRV, UPS, UAL, AMZN, BUCY, COF, CMG, SNDK, and SYNA.
Friday: EXC, HON, KEY, ERIC, SLB, TROW, and VZ.

Focus list for next week includes Thursday's setups for CREE, ALTR, and WYNN still in play. Also, add FSLR and ADBE at the blue lines on the charts below.

ADBE formed a base at these levels in August and could easily retest $30.00 on the MSFT rumor.

Let's review Friday's trades. We said that AMZN would likely break the $157.00 base in sympathy with GOOG earnings. And we also said it would likely gap up.

That's exactly how it played out. Opening gap, followed by a retest of the base. We wait for price to come back into the BB and form a tradable base. I exited after 3 consecutive WRBs.

Price consolidated the early move and there was no evidence that AMZN would retrace so I started looking for a potential second entry. Price formed a flat base. Two pivots into the same price levels is a tradable base. Price rallied and then retested the base before the final sprint into the close.

AAPL had an early run similar to AMZN but I missed it. In the afternoon, I noticed it was coiling near session highs. I took a long entry. Here again, price retested the base before ripping into the close.